Bullish sentiment muted despite market strength. The S&P 500 Index is making its best start to a year since 1991, and underlying technicals suggest to us that a retest of the December 24 lows is unlikely. Still, bullish sentiment among investors remains subdued according to the American Association of Individual Investors, among other gauges; however, that’s actually a contrarian indicator suggesting buyers are still on the sideline. And with the S&P 500 challenging its 200-day moving average, we could see sentiment turn the corner and buyers come back if it manages to remain above that key support level.
More trade headlines. The U.S. and China will meet again in Washington next week, according to Chinese President Xi Jinping, as the two sides continue trade talks in order to avoid an increase in tariff rates on March 1. U.S. stocks have rallied for 6 of the last 7 weeks, partially on optimism for a trade resolution, so any developments from next week’s meeting will be watched closely. We think a U.S.-China trade deal is coming soon, especially considering economic data has deteriorated globally, putting more pressure on both sides.
President expected to sign budget deal, declare national emergency for more wall funding. Congress approved a $333 billion deal on Thursday to avoid another government shutdown, which President Trump intends to sign though it provides just $1.375 billion for 55 miles of new border wall fences, well short of the $5.7 billion the president sought. Consequently, he indicated his intent to declare a national emergency, which could allow him to shift funds and resources to secure additional funding. Unsurprisingly, the comments were met with sharp criticism and may face legal hurdles.
LPL Research on CNBC. Senior Market Strategist Ryan Detrick was CNBC’s Squawk Box this morning discussing markets. You can watch the full interview here.
- Retail Sales (MoM, Jan)
- Industrial Production (MoM, Jan); Cons: 0.2%, LP: 0.3%
- University of Michigan Sentiment Index (Preliminary, Feb)
- Eurozone Trade Balance (Dec)
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